Smooth CEO handoff expected at Schlumberger

Smooth handoff expected at SchlumbergerKibsgaard to replace Gould as CEO on Aug. 1

BRETT CLANTON, HOUSTON CHRONICLE

Published 5:30 am, Friday, July 22, 2011

Schlumberger's announcement Thursday that CEO Andrew Gould will retire next month and be replaced by Chief Operating Officer Paal Kibsgaard may signal a change at the top of the world's largest oil field services provider but not likely a shift in course.

The move should be largely seamless, given that the succession plan had been well-telegraphed for months, Kibsgaard appears to have the support of top lieutenants and Wall Street has had ample opportunity to size him up, analysts said.

Investors also appeared to endorse the idea, sending Schlumberger shares up $2.55 to $90.96 in New York Stock Exchange trading Thursday.

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The reaction was a vote of confidence not only in the new pick but in the company Gould spent his last eight years as CEO rebuilding into a preeminent global oil field services firm.

"From our vantage point, his legacy is a formidable one, ranking him as the best and most effective CEO in the company's history," Bill Herbert, industry analyst with Houston investment bank Simmons & Company International, said in a report Thursday.

Schlumberger said Gould will retire as CEO on Aug. 1 and pass off to Kibsgaard, but Gould will remain chairman of the company until April. Tony Isaac, a current director on the company's board, will then replace him in that role.

Gould, 64, had recently hinted he was close to retirement. At an analyst presentation in Boston in February, he all but spilled the beans, saying the company "will go to new heights under Paal Kibsgaard's leadership."

"Anybody that didn't see this coming was asleep at the wheel," said Geoff Kieburtz, industry analyst at Weeden & Co. in Greenwich, Conn.

Gould, through a spokeswoman, declined interview requests Thursday.

Schlumberger, with principal offices in Paris, Houston and The Hague, works on a contract basis with oil and gas companies to provide everything from seismic surveys and drilling fluids to turnkey management of exploration and production projects.

Gould started his career with the company in 1975 in the internal audit department in Paris. Named CEO in 2003, he is credited with rebuilding the company into a technical and international oil services powerhouse after previous CEO Euan Baird racked up debts and attempted to diversify with a multi-billion dollar deal to acquire French IT firm Sema in 2001.

"He righted the ship," said Kieburtz, noting his quick moves to dismantle Sema and sell it off, as well as streamline Schlumberger's far-flung oil field services business.

"The result has been to not only reestablish Schlumberger as the leading enterprise in the oil service industry, but as one of the leading enterprises in the global energy business," Herbert said.

Along the way, Gould also relocated Schlumberger's U.S. headquarters from New York to Houston and helped increase the transparency of a company that for years had preferred to have little engagement with financial analysts and the public.

In quarterly earnings calls and speeches, the British-born executive became known for his intellectual and often blunt style. His detailed commentary on Schlumberger — considered a bellwether for the oil services sector - and broader trends in the oil and gas business also was followed closely by Wall Street.

Early last year, Gould expanded the company's lead in the oil field services business by announcing an $11 billion acquisition of smaller rival Smith International in Houston. The deal put the company back in drill bits, gave it full control of a major drilling fluids business in which it had been a joint venture partner and brought its employment in the Houston region to more than 9,600 people.

But Gould also showed his fallibility in recent years. Analysts said the company was caught flat-flooted by the recent boom in shale gas drilling in North America, where it continues to chase rivals. "Schlumberger has made strides in closing that gap," said John Keller, analyst with Stephens Research in Houston, noting a recent reorganization in the region.

A progress report will come today when the company releases financial results for the second quarter, he said.

Schlumberger also has been hit by the slowdown in activity in the Gulf of Mexico following the BP oil spill.

However, the company, with its vast scale and technical expertise, is still viewed by analysts as one of the best positioned to capture business from emerging international markets and an uptick in global energy demand seen in coming decades.

Kibsgaard, 44, has been with Schlumberger for more than 14 years, and keeps offices in Houston and Paris.

Previous roles include president of the company's reservoir characterization group and vice president of personnel, and he has done stints in the Middle East, Europe and the U.S.